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ANALYSIS: RBF’s NZ Dollar Investment Yields Higher Returns

Reserve Bank of Fiji’s New Zealand dollar investments yielded higher returns in 2014 compared to those denominated in the Australian dollar. This was the first time for this to happen
13 Jul 2015 10:23
ANALYSIS: RBF’s NZ Dollar Investment Yields Higher Returns
Reserve Bank of Fiji.

Reserve Bank of Fiji’s New Zealand dollar investments yielded higher returns in 2014 compared to those denominated in the Australian dollar.

This was the first time for this to happen since the second quarter of 2009.

This has been highlighted in the Reserve Bank of Fiji’s 2014 Annual Report released this week.

RBF’s investments in Australian securities, traditionally a major source of the bank’s income, were relatively low yielding on account of the RBA maintaining record low benchmark interest rates.

Reserve Bank of New Zealand was the first major central bank to begin its tightening cycle.

 

Foreign reserves

Meanwhile, also highlighted in the report was seasonality trends which saw foreign reserves on a downward trajectory. This was noted during the first few months of the year. The trend continued but luckily they rebounded as expected in the last two quarters.

The lowest foreign reserves level of $1,611.7 million was registered in July while the highest level of $1,822.6 million was achieved in December.

 

Trade deficit

Based on provisional data, the merchandise trade deficit was estimated to have widened by 29.2 per cent to $2.8 billion in 2014.

This was compared to an increase of 34.4 per cent in 2013. This was underpinned by a stronger increase in imports and decline in export earnings.

Domestic exports declined by 15.1 per cent when compared to a decline of 3.1 per cent in 2013. Total exports fell by 2.5 per cent compared to a 2.9 per cent decline in the previous year.

For the same period, total imports are estimated to have increased by 12.8 per cent compared to the 12.1 per cent growth in 2013.

Despite the widening of the trade deficit in 2014, the overall current account was somewhat supported by higher surpluses in the services (tourism earnings) and secondary income (personal remittances) accounts.

The trade deficit continues to be a concern for the Bainimarama Government. All efforts are being put in to encourage exports by expanding current and exploring new markets.

Also at the same time, efforts are being made to reduce our imports, with one of the biggest being our fuel bill.

But generally looking, in any growing economy, especially ones such as ours, during periods of economic growth, imports do tend to increase as investment continues to boom.

However, agriculture could be one area where import substitution could greatly assist.

Feedback: rachnal@fijisun.com.fj

 

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